Laird Superfood, Inc. Income Taxes Disclosure

9.	Income Taxes

 

The Company had a tax net loss for the years ended December 31, 2025 and 2024 and therefore has recorded no assessment of current federal income taxes. The Company is subject to minimum state taxes for various jurisdictions as well as subject to franchise taxes considered income taxes under ASC 740, Income Taxes. A reconciliation of income tax expense at the federal statutory rate to the income tax provision at the Company’s effective rate is as follows:

 

Effective Tax Rate
 

The following table disaggregates the Company’s effective tax rate, on a prospective basis, for the year ended December 31, 2025: 

 

		Year Ended
		December 31, 2025
		Amount				Percent
U.S. federal statutory tax rate		$	671,613				21	%
State and local income taxes, net of federal income tax effect (1)			66,025				2	%
Foreign tax effects			—				0	%
Effects of changes in tax laws or rates enacted in the current period			—				0	%
Effect of cross-border tax laws			—				0	%
Tax credits			—				0	%
Changes in valuation allowances - federal			(773,161	)			(24	%)
Nontaxable or nondeductible items
Stock compensation: RSU windfall			177,207				6	%
Stock compensation: PSU windfall			—				0	%
Capitalized stock acquisition costs			(195,900	)			(6	%)
Other			6,606				0	%
Changes in unrecognized tax benefits			—				0	%
Other adjustments			26,864				1	%
Effective tax rate		$	(20,746	)			(1	%)
(1) State taxes in Texas and Oregon made up the majority (greater than 50 percent) of the tax effect in this category.

 

The following table disaggregates the Company’s effective tax rate by municipality, on a prospective basis, for the year ended December 31, 2025:

 

		Year Ended
		December 31, 2025
U.S. Federal Income tax statutory rate			0	%
State and local income and franchise taxes			(1	%)
Foreign income tax statutory rate			0	%
Effective tax rate			(1	%)

 

The following table presents the Company’s effective tax rate for the year ended December 31, 2024: 

 

		December 31, 2024
Income tax benefit at statutory rates		$	333,560
Valuation allowance for deferred tax assets			(424,218	)
Stock-based compensation			367,824
Fixed assets			(187,429	)
Other			(150,061	)
Reported income tax expense		$	(60,324	)
Effective tax rate:			-3	%

 

Income Taxes Paid

 

The following table presents cash paid for income taxes disaggregated by foreign, domestic, and state taxes, on a prospective basis, for the year ended December 31, 2025:

 

		Year Ended
		December 31, 2025
Federal		$	—
State			27,470
Foreign			—
Total income taxes paid (net of refunds received)			27,470

 

The following table presents cash paid for income taxes in the following jurisdictions that exceeded 5 percent of total income taxes paid (net of refunds), on a prospective basis, for the year ended December 31, 2025:

 

		Year Ended
		December 31, 2025
Texas		$	14,500
Oregon			11,012

 

As of December 31, 2025, the Company did not provide a current or deferred U.S. federal income tax provision or benefit for any of the periods presented because the Company has reported cumulative losses since inception. The Company has recorded a provision for state income taxes and a corresponding current state income tax payable of approximately $3,028 and $9,306 as of December 31, 2025 and 2024, respectively. 

 

Deferred Taxes

 

The Company’s deferred tax assets and liabilities consisted of the following:

 

		December 31, 2025				December 31, 2024
Deferred tax assets:
Net operating loss carryforwards		$	21,799,888			$	21,368,607
Intangible assets			1,982,705				2,115,891
Property and equipment			529,577				618,260
Accrued expenses			762,759				367,651
Unexercised options			1,054,163				1,132,698
Other			528,387				661,567
Total deferred tax assets			26,657,479				26,264,674
Valuation allowance			(26,657,479	)			(26,264,674	)
Total net deferred tax assets		$	—			$	—

 

The Company assesses its deferred tax assets and liabilities to determine if it is more likely than not, they will be realized; if not, a valuation allowance is required to be recorded. Management has determined it is more likely than not that the deferred tax assets would be realized, thus a full valuation allowance was recorded against the deferred tax assets. The Company may reduce the valuation allowance against definite-lived deferred tax assets at such a time when it becomes more likely than not that the definite-lived deferred tax assets will be realized. The change in the valuation allowance for deferred tax assets and liabilities for the years ended December 31, 2025 and 2024 were net increases of $0.4 million and $0.6 million, respectively.

 

Net Operating Losses

The following table presents net operating losses (“NOLs”) and other income tax carryforwards for the following periods:

 

		December 31, 2025				December 31, 2024
NOLs and other income tax carryforwards
Federal NOLs pre-2017 (1)		$	1,868,077			$	1,868,077
Federal NOLs post-2018 (2)			85,062,984				82,744,578
State NOLs (3)			59,624,294				60,941,124
Total NOLs			146,555,355				145,553,779
Credits (4)			219,488				219,488
Other carryforwards (4)			1,309,250				1,333,552
Total NOLs and other income tax carryforwards		$	148,084,093			$	147,106,819
(1) Can be carried forward for 20 years and which begin to expire in 2036.
(2) Can be carried forward indefinitely.
(3) Can be carried forward for between 15 and 20 years and which begin to expire in 2031.
(4) Can be carried forward for between one and five years and begin to expire in 2026.

 

The use of NOLs may be subject to certain limitations, such as those triggered by ownership changes under Section 382 of the Internal Revenue Code. Because these provisions, the use of a portion of our NOLs and tax credit carryforwards may be limited in future periods. Further, a portion of the carryforwards may expire before being applied to reduce future income tax liabilities.

 

GAAP requires management to evaluate and report information regarding its exposure to various tax positions taken by the Company. The Company has determined whether there are any tax positions that have met the recognition threshold and has measured the Company’s exposure to those tax positions. Management believes that the Company has adequately addressed all relevant tax positions and that there are no unrecorded tax liabilities. 

 

Open Tax Years

 

As of December 31, 2025, the Company is subject to examination by U.S. federal and state taxing authorities for years that remain open under the applicable statutes of limitations.

 

Under the Internal Revenue Code, the Internal Revenue Service generally has three years from the later of the return’s original due date or the date the return is filed to assess additional federal income taxes. Based on this period, the Company’s U.S. federal corporate income tax returns for tax years 2022 through 2025 remain open to examination as of December 31, 2025.

 

The Oregon Department of Revenue applies a five‑year statute of limitations for issuing a notice of deficiency related to corporate excise and income taxes. Accordingly, the Company’s Oregon corporate income tax returns for tax years 2020 through 2025 remain open to examination.

 

For Texas franchise tax purposes, the Comptroller of Public Accounts generally has four years from the date a tax becomes due and payable to assess additional franchise tax. As a result, the Company’s Texas franchise tax filings for report years 2021 through 2025 remain open as of December 31, 2025, 

 

Management believes that adequate provision has been made for any income tax uncertainties related to these open tax years. Adjustments, if any, resulting from examinations are not expected to have a material effect on the Company’s consolidated financial statements.